When consumption or production of a product has a harmful side effect that is borne by people not directly involved in the market exchange for that product, the side effect is called a (n) :

Question

Physics

Junior Pruitt

27 February, 17:48

When consumption or production of a product has a harmful side effect that is borne by people not directly involved in the market exchange for that product, the side effect is called a (n) :

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Answers (1)

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Reese · Answer 1

An external cost.

Explanation:

An external cost is the cost borne upon by a third party, maybe an individual, firm or community as a result of a market exchange for a product which they are not directly involved in. And this can occur in both production and consumption.